Equinor’s Energy Transition Plan is Launched While Market Cap Declined. What does this mean for Bay du Nord?

Equinor, an oil and gas powerhouse is a Norwegian energy company that rivals a world-class operation driving the new energy transition around the globe. Their purpose is to turn natural resources into energy for people and progress for society meeting world energy demand and energy security.

Market Cap Decline of -30.16 % in One Year

Equinor ASA has a market cap or net worth of $80.33 billion as of June 2, 2023. Its market cap has decreased by -30.16% in one year, which may be one factor in explaining the company’s recent decision to further investigate the financial viability of mega-project Bay du Nord, Offshore Newfoundland.

Market capitalization, or market cap, is one measurement of Equinor’s company size. The market capitalization, commonly called a market cap, is the total market value of a company’s outstanding shares and is commonly used to measure how much a company is worth. It’s interesting to note that the Norwegian State is the largest shareholder with 67%, managed by the Ministry of Trade, Industry, and Fisheries, ensuring maximum benefits are returned to the people of Norway.

Equinor is also listed on the Oslo and New York stock exchanges, ensuring broad international ownership.

Factors Contributing to the Bay du Nord Delay

Equinor’s market cap decline, the rising costs of goods and supplies, increased global inflation, and global cost increases based on supply chain challenges, could naturally add up to set in motion a course of correction in the financial management of assets, development timelines, and the re-evaluation of global projects for Equninor. This coupled with the company’s commitment to half their operated greenhouse gas emissions by 2030 relative to 2015 levels, with 90% of the cuts coming from absolute reductions, demonstrates their firm commitment to reducing emissions within their current portfolio.

This cumulative big picture of the financial and environmental considerations of the company would most likely lead to delays in projects currently on the board for development. At the recent EnergyNl conference in St. John’s Newfoundland, Equinor leader, Tore Løseth, country manager for Equinor Canada, spoke to a room full of industry players, business owners, workers, and stakeholders, many of whom stand to gain enormous business growth benefits from the Bay du Nord project. Tore was in the uncomfortable position of having to deliver the disheartening news that the predicted $16 billion Bay du Nord project will be delayed.

Tore Løseth said, “Bay du Nord is one of the biggest subsea development that Equinor will ever undertake both in size and investment. It’s important to make the best financial decisions at the right time to enable a successful investment. This past year, the project has seen a significant cost increase in many aspects of development. This is largely driven by increased global inflation and cost growth in the supply industry nationally and internationally. This is a trend we are seeing across our portfolio. Bay du Nord teams will now spend the next couple of years evaluating all the opportunities to make a stronger project. To do this we will work closely with our suppliers, partners, and stakeholders to improve project competitiveness while ensuring a development that provides significant benefits for Newfoundland and Labrador.”

Bay du Nord Delayed:
What does that mean for the province of Newfoundland and Labrador and its people?

The Bay du Nord project (BdN) consists of several oil discoveries in the Flemish Pass basin, some 500 km northeast of St. John’s in Newfoundland and Labrador, Canada. The first discovery was made by Equinor in 2013, followed by additional discoveries in 2014, 2016, and 2020. Bay du Nord is a mammoth project with huge opportunities for jobs, supply base, technology transfer, business growth, supply chain infrastructure, revenue, royalties, and the building of a $16 Billion energy infrastructure in the province of Newfoundland and Labrador.

Despite Delays Bay du Nord: Remains an exciting project on the horizon

Tore Løseth looks to the future, “In spite of this postponement I’d like to share the exciting paths Bay du Nord will take in advancing by providing energy security with low carbon emissions. The project remains an important part of Equinor and our partner BP’s long-term development portfolio. I feel confident that even with this delay, I can illustrate what will make Bay du Nord important in the decades to come. At Bay du Nord we are living an innovation mindset focused on long-term value creation that will break new ground in a smarter and technologically advanced way. This is also the philosophy of how we optimize our oil and gas assets to reach a net-zero future. Last year Equinor published our Energy Transition Plan, a concrete plan focused on developing new energy and new industries, creating value for local communities, and how we plan to meet net zero by 2050.”

Newfoundland: Key Energy Hub for World Energy Demand

Given the world is in an energy crisis and demand for energy is incredibly high in places like Europe Newfoundland is strategically aligned to deliver energy worldwide. Given that Newfoundland’s offshore industry is established, and geopolitically stable and its proximity to markets for renewables and non-renewables is unprecedented, Newfoundland’s energy industry is globally poised to be in very high demand. It’s predicted that wind and hydrogen could put Newfoundland on the map as the world’s leader in Hydrogen. Think about that.

The energy transition is key to the new energy mix that will lead us to a sustainable net-zero future. Eqninor’s Energy Transition Plan outlines the company’s goals and strategies for transitioning to a low-carbon future. Bay du Nord will be evaluated and restructured to ensure it delivers low-carbon fuel within the critical framework of the Net Zero plan.

Here is a summary of the key points of Equinor’s Energy Transition Plan:

Goals

• Equinor aims to achieve net-zero emissions by 2050.
• The company plans to reduce its absolute greenhouse gas emissions by at least 50% by 2050, compared to 2019 levels.
• Equinor plans to increase its renewable energy capacity to 12-16 GW by 2030.

Strategies

• Equinor plans to invest in renewable energy, such as offshore wind and hydrogen.
• The company will continue to produce oil and gas but with a focus on reducing emissions and increasing efficiency.
• Equinor will use digitalization and artificial intelligence to optimize its operations and reduce emissions.
• The company will work with partners and stakeholders to accelerate the energy transition.

Initiatives

• Equinor plans to develop a large-scale offshore wind farm in the North Sea, which will have a capacity of up to 4.5 GW.
• The company will invest in hydrogen production and carbon capture and storage.
• Equinor will continue to explore oil and gas but with a focus on reducing emissions and increasing efficiency.
• The company will use digitalization and artificial intelligence to optimize its operations and reduce emissions.

Equinor’s Energy Transition Plan outlines the company’s commitment to transitioning to a low-carbon future. By investing in renewable energy, such as offshore wind and hydrogen, and reducing emissions from its oil and gas operations, Equinor aims to achieve net-zero emissions by 2050. The company’s use of digitalization and artificial intelligence will help optimize its operations and reduce emissions. Equinor’s plan is an important step towards a more sustainable energy future.